Pin it
« VIEW BLOG LIST

UNDERSTANDING THE VALUE OF A REAL ESTATE APPRAISAL

Weichert Realtors Porter Properties
July 15, 2011

Appraisal FAQS – Buying or Selling Property in Auburn

A real estate appraisal is an important part of a real estate transaction. Appraisals are very detail reports providing an accurate market value for a property. They are most often required by the lender.

The person who provides real estate appraisals is called an appraiser. An appraiser is

  • licensed and completed a course required by the state in which the appraisal is conducted
  • a third party without any connections to the real estate transaction

How is the value of a property determined?

Data is collected and analyzed by the appraiser. He or she will compare the subject property (the home that is being appraised) with a minimum of three properties (called comparable or comps) that have recently sold.

A comparable is a property that is as similar to the subject property as possible. Both recent sales and prominently to the subject property are considered most effective. Other considerations include property type, square footage, bedroom and bathroom count, property conditions etc.

The side by side comparison adjustments include:

  • the overall local real estate market conditions
  • average sales times
  • condition of property
  • location of property
  • and many other relevant influences

What happens when an appraisal comes in lower than the agreed upon price in the purchase agreement?

The buyer’s lender is probably going to make adjustments to previous mortgage approvals which could dramatically affect the buyer’s ability to complete the purchase. Sellers may need to renegotiate the original purchase agreement to ensure a successful transaction. When an appraisal comes in at or above the purchase price indicated in the purchase agreement both the buyer and seller are one step closer to a closing.

Both buyers and sellers can help eliminate unforeseen problems to the real estate transaction such a low appraisal with a comparative market analysis (CMA). A CMA is very similar to an appraisal and is provided by their Real Estate agent.

Weichert, Realtors ® – Porter Properties offers free comparative market analysis to all Opelika and Auburn homeowners. If you would like to uncover the market value of your home call them today at 334-887-2070. You can also view Opelika and Auburn properties for sale online 24/7.